AXA steps up sustainability strategy with new framework and subdebt

Global insurer AXA strengthened its sustainability leadership with an inaugural €1bn Tier 2 Subordinated Green Bond aligned to its new framework.

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On the heels of its new Sustainability Bond Framework published in March, French insurance giant AXA issued a €1bn 20.5-year non-call 10.5 years Tier 2 Subordinated Green Bond, for which BNP Paribas was joint green structuring advisor, joint global coordinator, joint lead manager, as well as issuing and paying agent.

Robust framework and investor reception

This was AXA’s first issuance aligned to its new framework and its first green subordinated debt, opening sustainable capital markets to a wider investor base seeking relatively novel green subdebt. Strong investor response reflects this growing demand, with over three times oversubscription the bond.

Xuan Sheng Ou Yong, ESG & Green Bonds Analyst at BNP Paribas Asset Management, said: “We believe AXA’s inaugural green bond demonstrates how AXA intends to positively contribute towards the goals of the Paris Agreement via its investments. Particularly, BNP Paribas Asset Management fully supports AXA’s considerations of “intentionality”, “direct contribution”, and “additionality” in their selection of eligible green assets, and AXA’s wider Sustainability Bond framework”.

Green issuance has now become a must for the insurance industry

Emmanuel Gendreau, Global Head of Insurance Coverage, Financial Institutions Coverage, BNP Paribas CIB

Proceeds from the new benchmark bond will be invested in green projects identified in the framework:

  • Green buildings
  • Renewable energy
  • Clean transportation
  • Energy efficiency
  • Natural resources/sustainable forestry

Insurance companies are increasingly integrating climate risk into their investment strategies. Green debt issuance from insurance companies is likely to continue growing as insurers shift their sustainability strategies from a focus on liabilities to a greater focus on their asset responsibility, balancing their climate response to both sides of their balance sheets.

“Green issuance has now become a must for the insurance industry. This is a turning point as sustainable finance innovation is increasingly mainstream, as more issuers are accessing the green bond market. The success of AXA’s inaugural innovative Tier 2 Subordinated Green Bond demonstrates how ESG leaders at the forefront of the industry are driving forward the transition agenda across finance”, said Emmanuel Gendreau, Global Head of Insurance Coverage, Financial Institutions Coverage, BNP Paribas CIB.